It’s worth knowing about the different types of mortgages, so that you can pursue the deal that best suits your financial situation.
Lots of mortgages come with introductory deals that can reduce the monthly rates you pay for a certain period. These range from simple discounts to fixed rate mortgages, where the rates will stay the same regardless of changes in interest rates, and tracker mortgages, where the rates will rise or fall depending on interest rates set by the Bank of England.
After your deal expires you will begin paying the Standard Variable Rate or SVR (unless you decide to remortgage and find a new deal at this point). The SVR is also affected by interest rates, though these will now be set by your lender rather than the Bank of England.
You might also have the option to choose between an interest-only mortgage and a repayment mortgage. With a repayment mortgage, you pay back both interest and some of the capital you’ve borrowed each month, so by the end of the mortgage you have completely paid off your loan. Interest-only mortgages are less common nowadays; with these, you only pay off the interest on a monthly basis, and then pay off the capital all at once at the end, sometimes by selling the property.
These are only a few of the different types of mortgages available, so it would be well worth exploring your options in more detail. Check out our article Different types of mortgages explained for a more in-depth explanation of all the different kinds.
It’s not always easy to work out which mortgage option is right for you, so if you’re in any doubt, it’s worth speaking to a professional mortgage advisor. You can read more on why this might be a good idea in our guide Should I get advice on my mortgage?
There are a number of fee free mortgage advisors in the market, but if you’re looking for somewhere to start, we’ve partnered with experienced mortgage advisor, Teddy Cenaj, to offer fee free mortgage advice to Rest Less members. You can book a free, no obligation call back here or call Teddy on 020 7153 6011*.